Renting without a Tenancy Agreement?

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My good friend Ron Ong is someone I love to have coffee and learn from. He is also a very dynamic person and to him everyday is about how to be better than yesterday. He contributed this easy to read and extremely important article on people thinking that renting agreement is just not worth the hassle. Let’s be reminded that whenever there’s any dispute for example, it’s much better to have an agreement to go back to. The rights of the owner is also better protected too. Please enjoy the article. Feel free to know him better too. (click here) Link with him in FB if you want to keep learning too.

Article by Ron Ong

Nothing agreed to and written on paper? This is NOT a good idea. Without any written proof, verbal contracts are very difficult to prove who is actually in the right or wrong.

But how can a tenancy exist without any written contract in the first place?

Below are scenarios where situations like this are possible:-

° Old tenancies, where any written document signed has been lost

° Informal agreement to rent the property to friends and or relatives where the parties felt that there was no need for any formalities ° An initial deposit for renting leading up to the a tenancy agreement but the tenant was allowed into occupation before the paperwork was finalised and signed, and then the tenant refused to sign any documentation ° It might also be worth mentioning that there might be an initial written agreement and the tenancy term has ended but the tenant continues to stay on in the property

Essentially, any occupant in situations similar to this is a tenant at will. It can also be called a “month to month tenancy” because landlords usually require tenants to pay rent once a month, in advance. Or the tenancy could also run from week to week or from month to month, depending on how rent is paid.

Now let’s take a look at some of the disadvantages to the landlord:-

• Obviously there may be arguments later over exactly what was agreed on it and it may be difficult to prove if one of the parties subsequently denies that this was agreed.

• There is no evidence when the tenants moved in and how much rent they should be paying.

• If you have taken a deposit you have nothing to authorise making any deductions and rent is always payable in arrears if there is no tenancy agreement term to say it is payable in advance.

• There is no authority for the landlord to make any deductions from the tenancy deposit – no matter how dreadful the condition of the property when the tenant moves out.

• As a tenant at will, the tenant will have the right to “lawful and exclusive possession” of the property you rent. This means you can only come into your apartment with the tenant’s permission. Otherwise, you are trespassing even if you own the property.

• There will be no terms and conditions governing the tenants use of the property – nothing to stopping him or her from painting all the walls black and changing all the locks.

• It will be all too easy for the tenant to just use the garage, other rooms, furniture, appliances or whatever and then deny that there was any agreement that this would be excluded from the tenancy. It will be very difficult for you to prove otherwise.

• There is nothing to prohibit business use. Normally a tenancy agreement will specifically exclude this. If a tenant starts to use a property for his business the tenancy may eventually be deemed to be a business tenancy and not a residential tenancy at all.

• Money and time wasted into court proceedings just to get an eviction order. But is this necessary?

If you have a visitor or tenant that just will not leave, you may first want to try getting police assistance. This may be enough for him or her to move out on his or her own, feeling wholly unwelcome in your property. However, more often than not, police officers become wary of getting involved in domestic disputes because they have no way of knowing whether the occupiers are trespassers or tenants, so they will usually refuse to remove the person just in case you are trying to skip the eviction process.

If the police method does not work out, the only way you can get them out is by evicting them through the courts.

Conclusion

It is very important to document all communication between a landlord and a tenant. By having a well-constructed tenancy agreement which outlines the tenant and landlords’ rights and responsibilities, any unnecessary disputes would be avoided.

If you are discussing a potential tenancy or renewal of a contract, you should always use the words ‘Subject to Contract’ on any correspondence relating to any potential tenancy or speaking with prospective tenants.

NEVER let tenants in the property without getting the tenancy agreement signed first. Do not trust them to come to your office and sign it later. They may say they will, but if they turn round and refuse to sign anything, there is nothing you can do about it.

Know that there are plenty of resources in putting a written tenancy agreement in place. You don’t have to draft one yourself. You can seek legal help and engage a professional to get it done for you.